Home Subscribe Login Contact Us Search Journal Articles PFM RSS Feed

PFM Articles Search Journal Articles

Procyclical State Spending in the USA: The Impact of Political Ideology

Author: ANDREW ABBOTT and PHILIP JONES
Published in PFM, Vol. 12 No. 3

Fiscal policy is procyclical when government expenditures and tax revenues increase during periods of economic growth and decrease during periods of economic slowdown. This paper estimates sub-central government spending and revenue cyclicality in the USA. The panel dataset comprises observations for 51 states from 1963 to 2006. The paper considers why some sub-central governments are more likely to spend procyclically. The first hypothesis is that differences in cyclicality across the states of the USA reflect differences in voters’ political ideologies. The second is that differences in cyclicality reflect differences in political networks. States are more likely to spend procyclically if the state governor is a Democrat. Ideology is relevant but the likelihood of procyclical spending is even higher if there is a coincidence between a Democratic state governor and Democratic president.

Subscribers: Login to read this article

Guests: Subscribe to PFM, or purchase individual article access for $10.
The article is not available for automatic download. We will email the article to you as a PDF file upon receiving your payment, typically within 24 hours.